Accountability and Efficiency in Medical Services

In a system where profits, not patient health, is the top priority of many health care providers, states are beginning to develop "pay for performance" incentives and promoting other innovations to hold providers more broadly accountable. 

The federal Medicare program has introduced its own pay for performance experiments to promote financial incentives for providers based on quality and health care results.  State Medicaid systems are also using a range of tools to reward quality providers:

  • New York pays financial incentives to managed care providers who deliver good quality results.
  • California assigns additional patients to providers who perform well on quality measures.
  • A number of states are publicly reporting health plan performances to spur better performance. 

Initial studies indicate that such programs provide significantly better health care results.   States are also using such measures to tackle the racial and ethnic disparities in health care outcomes that are so prevalent in our health care system.  For example, Massachusetts' comprehensive health law enacted this year included hundreds of millions of dollars in pay-for-performance system with requirements that hospitals and doctors demonstrate reductions in such racial disparities in treatment as a condition of receiving the financial incentives.

Massachusetts also is following the trend of many states in trying to promote better use of technology in a medical system burdened with too much literal paperwork that prevents easy sharing of medical records or easy evaluation of medical data.  A 2005 RAND study estimated that full implementation of so-called Health Information Technology (HIT) could save $77 billion in costs annually across the country through better coordination, less time spent on administration and better drug utilization.

Unfortunately, as the RAND report notes, there is "no market pressure to develop HIT systems" between all the fragmented parts of our health care system -- one reason a strong government role is no needed.

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